Here is an important concept worth repeating–When an established trendline is breached, it does not automatically equate to a massive change in trend. But it does compel the often-castigated shades of grey, which traders in social media abhor. In other words, when you see a momentum stock like marquee solar play First Solar lose a well-defined channel (purple lines) dating back to August 2012, it does not render the stock a high probability short, per se. Furthermore, the stock could easily be correcting its steep rise before another leg higher materializes.
As you can see on the daily chart, below, First Solar is in a neutral holding pattern (light blue lines) until further notice. Until that is breached, betting on the next big move here, either way, is premature.
Bottom line: A trendline breach, on any chart, is not the end of the world, but certainly a sign to turn cautious or neutral.
______________________________________
